The recent award-winning investigative current affairs programme, Dispatches on Channel 4, was titled HOW TO BLOW YOUR PENSION.
The programme, presented by Michael Buerk, highlighted facts from various surveys which prove that the majority of those who will be able to take lump sums from their pension pots are unaware of the full facts and the consequences of doing so. This means the need for professional financial advice is now more vital than ever.
It also reported that there are product providers in the market who are still recommending annuity contracts to clients and in some cases if clients do not contact the provider their money is being moved into annuity contracts automatically.
The UK Government’s Older Workers Business Champion, Dr Ros Altmann, CBE, stated that it was wrong for people to be forced to take annuities and should have freedom of choice in retirement.
No matter what your pension provider offers you, however good it may sound, there are always other alternatives that may better suit your circumstances. Many of the decisions you make at retirement can be irreversible, so always explore the options.
The programme also emphasised the risks of longevity – people living longer but having spent their pension pot too soon, and how pensioners face a massive drop in their standard of living if forced to rely on the State Pension only.
If you missed the programme, broadcast on 12 January, it’s certainly worth catching up on – even if it’s just to get an idea of some of the issues surrounding the recent pension reforms and just how many option you will now have.
The overriding fact to come out of the programme was that retirees want and need flexibility but also certainty – being allowed to take lump sums from their pension pot, or varying the level of income they receive, something that cannot be done if you have purchased and annuity.
Explore your options, seek advice and don’t be disappointed.
by Charlie Kearns
Independent Financial Adviser
